Vernet SA has issued a convertible bond whose interest expense for the year is 200,000 (in euros). This expense is deductible at a rate of 25% (case datum). The basic profit attributable to ordinary equity holders is 3,000,000. On conversion, the interest expense would no longer be incurred. Calculate the after-tax adjustment to be made to the numerator of diluted earnings, then the diluted numerator.
- Interest expense for the year before tax
- 200,000
- Tax rate applicable to this expense
- 25 %
- Profit attributable to ordinary equity holders
- 3,000,000